Illinois Transfer on Death Deed Form

Jeramie Fortenberry

Jeramie Fortenberry

Attorney (J.D., LL.M.)

Last updated May 21, 2023

What is an Illinois transfer-on-death (TOD) deed?

An Illinois transfer-on-death instrument (or TOD instrument) transfers real estate to a beneficiary automatically when a property owner dies. It works in much the same way as a beneficiary designation on a bank account. A transfer-on-death instrument that is properly signed, notarized, and recorded passes the property’s title to the named beneficiary without the need to use a probate proceeding to transfer the property.1

What is the purpose of an Illinois TOD deed?

An Illinois transfer-on-death instrument can be thought of as a substitute for a will or trust. Like other estate-planning tools, a TOD instrument lets a property owner keep the property for life and decide in advance how the property will be disposed when the owner dies. The primary advantage of a TOD instrument over a will is that it allows the real estate to pass to the beneficiary without going through probate.2 A living trust can also keep real estate outside of probate, but a TOD instrument is a more cost-effective option than a trust in most cases.

Depending on the owner’s situation, TOD instruments may offer several additional advantages along with avoiding probate:

  • Ownership continuity. Because a transfer-on-death instruments is not an immediate transfer, it does not alter the character of the property. For example, if a married couple holds title as tenancy by the entirety, the property can retain its status as tenancy by the entirety during the couple’s joint lives.
  • Tax benefits. TOD instruments do not transfer the property until death, so the current owner is treated as still owning the property until death. This treatment allows the beneficiaries to take advantage of a step-up in basis, which permanently erases any taxable capital gain that accrued in the property before the owner’s death.
  • Lower legal fees. Before states began authorizing transfer-on-death deeds, living trusts were usually the best option for retaining control during life and avoiding probate at death. Creating and funding a living trust can be expensive. Transfer-on-death deeds provide a relatively simple, lower-cost alternative.

What is the benefit of avoiding probate?

Transfer-on-death deeds were designed specifically for probate avoidance. They allow a real estate owner to transfer property to family members of other heirs without having to go through the probate process. Probate is a relatively expensive and time-consuming process. Keeping real estate out of probate reduces the cost of estate administration and usually allows the property to formally take title to the property sooner than if it was distributed through the owner’s will.3

What types of property can be transferred using an Illinois TOD deed?

An owner of Illinois real estate can use a TOD instrument to transfer title to a beneficiary upon the owner’s death.4 The original version of the Illinois law limited the use of TOD instruments to residential real estate.5 Effective in 2022, the Illinois legislature expanded the allowable use of TOD instruments to any interest in Illinois real estate.

An owner can use a TOD instrument to transfer any ownership interest in Illinois real estate that the owner has the power to transfer at his or her death. This includes a partial interest in real estate that the owner co-owns with another person—though there are special rules for co-owners who have a right of survivorship.6

A TOD instrument created under Illinois law can transfer real estate located in Illinois. An Illinois resident who owns real estate in another state may be able to transfer the out-of-state property using a TOD deed created under that state’s law (if the state authorizes TOD deeds).

What Is the effect of an Illinois TOD deed while the owner Is alive?

One of the most attractive features of Illinois TOD instruments is that they have essentially no legal effect as long as the owner is still alive. A TOD instrument does not increase or decrease any of the below parties’ rights during the owner’s life.

  • Owner’s rights. A TOD instrument does not limit the owner’s right to sell, transfer, or mortgage the property during life.7
  • Creditors’ rights. A TOD instrument does not affect the rights of the owner’s creditors, transferees, lienholders, mortgage lenders, or other third parties.8 The property is not subject to claims of a beneficiary’s creditors.9
  • Beneficiary’s rights. The beneficiary receives no ownership interest in the property until the owner’s death.10
  • Medicaid eligibility. An Illinois TOD instrument has no impact on the owner’s or the beneficiary’s eligibility for Medicaid or other public assistance programs.11

Can the owner sell the property after recording a TOD deed?

An owner has the same right to sell or transfer the real estate after recording an Illinois TOD instrument that the owner had before recording it.12 If the owner transfers the property during life, a TOD instrument recorded before the sale is effectively void. If the owner entered into a valid contract to sell the property but has not yet transferred it to the purchaser, the TOD instrument is still effective, but the beneficiary receives the property subject to the purchaser’s contractual rights.13

Attorney Practice Note: The owner’s continuing right to sell full ownership of the property is a key difference between an Illinois TOD instrument and a traditional life estate deed. TOD deeds and life estate deeds both transfer property at death, but life estate deeds limit the original owner’s property rights during life. A life estate deed transfers a remainder interest in the property to the beneficiary when the deed is signed. The remainder is a vested interest, so the current owner needs the beneficiary’s consent to change or revoke the life estate deed or transfer complete title to another party. A transfer-on-death deed does not give the beneficiary an enforceable legal interest in the property until the owner dies, so the owner keeps complete control over the property during his or her life.

Another type of deed—called an enhanced life estate deed or a lady bird deed—uses a different approach to let the owner keep control over the property for life and transfer it outside probate at death. Lady bird deeds are a specialized type of life estate deed recognized in only a handful of states—including Florida, Texas, and Michigan but not including Illinois.

Is an Illinois TOD deed revocable?

An Illinois TOD instrument is fully revocable or amendable until the owner’s death.14 The owner has the right to revoke the TOD instrument even if the deed itself says it is not revocable.

An owner can effectively revoke a TOD instrument by recording a deed transferring the property during the owner’s life. Or, an owner can expressly revoke the TOD instrument using:

  • Another TOD instrument. The owner can revoke an existing TOD instrument (in whole or in part) by recording another TOD instrument that expressly revokes the earlier TOD instrument or that is inconsistent with the earlier TOD instrument.15
  • Revocation instrument. The owner can revoke an existing TOD instrument by recording a revocation instrument that expressly revokes the TOD instrument in whole or in part.16

A document that revokes a TOD instrument must be signed and recorded in compliance with the same formalities that apply to a TOD instrument.17 An owner cannot revoke an existing TOD instrument by:

  • Physically destroying the existing TOD instrument;
  • Signing a written document that is not recorded; or
  • Including a revocation provision in the owner’s will.18

What Is the effect of an Illinois TOD deed when the owner dies?

If the owner still owns the property at death, a TOD instrument passes title to the property to the named beneficiary under the terms of the TOD instrument.19 TOD instruments are considered nontestamentary, so the property does not need to go through probate to transfer to the beneficiary.20 The beneficiary simply confirms that title now rests with the beneficiary by recording a notice of death affidavit with the information listed in the statute.21

An Illinois TOD instrument transfers ownership of the real estate to the beneficiary with no warranty of title.22 This means that there is not guarantee that the original owner actually held clear title to the property. If there is a title problem with the property, the beneficiary is responsible for completing any actions necessary to clear the property’s title. The beneficiary takes title subject to any encumbrances—like liens, mortgages, assignments, or other third-party interests—that affect the property as of the owner’s death.23 The beneficiary’s interest may also be subject to creditor claims or estate-administration expenses if the owner’s estate is insufficient.24

A TOD instrument’s lack of a warranty of title makes it similar to an Illinois quitclaim deed, which also provides no warranty of title and which is often used in the gift context. By contrast, Illinois warranty deeds and special warranty deeds transfer real estate with a complete or partial warranty of title (respectively).

Attorney Practice Note: Illinois law gives a property owner’s surviving spouse the right to renounce a TOD instrument.25 The right to renounce is comparable to an Illinois spouse’s right to renounce a deceased spouse’s will—which works similarly to what other states call a spousal elective share.26 A surviving spouse who renounces a TOD instrument is entitled to a one-half interest in the property—or a one-third interest if the deceased owner has a surviving descendant. A married person can waive the right to renounce the other spouse’s TOD instrument in a prenuptial agreement or within the TOD instrument itself.27

Can an Illinois TOD deed leave property to multiple beneficiaries?

An Illinois property owner can use a transfer-on-death instrument to transfer property to one or more beneficiaries.28 The default rule is that multiple beneficiaries named in a TOD instrument receive the property in equal shares as tenants in common with no right of survivorship.29 The owner can modify the TOD instrument so that it transfers the property to the beneficiaries under different terms.

Can joint owners sign an Illinois TOD deed?

Co-owners of Illinois real estate can use a TOD instrument to transfer the property upon death. There are special rules for co-owned property subject to a TOD instrument. The effect of the deed depends on the co-ownership form the owners are using to hold title.

Co-owners who are tenants in common each have an undivided interest in the property.30 A tenant in common’s interest ordinarily passes to his or her heirs under a will or under intestate succession rules. If a tenant in common records a TOD instrument, his or her ownership interest passes to the beneficiary at death—at which point the beneficiary then co-owns the property as tenants in common with the other original co-owner.

Co-owners who are joint tenants hold title with a right of survivorship.31 One or both joint tenants can record an Illinois TOD instrument.32 If both joint tenant’s sign the TOD instrument, the beneficiary named in the transfer-on-death deed does not take title until all joint owners have died. The last surviving joint tenant can revoke the TOD instrument until his or her death—even if the joint tenants had an agreement not to revoke it.33

If only one joint tenant records a TOD instrument, its effectiveness depends on whether that joint tenant is the last joint tenant to die. This is because the right of survivorship takes priority over a TOD instrument. Thus, a TOD instrument recorded by a joint tenant does not pass title to the beneficiary if there is a surviving joint tenant.34 In other words, a joint tenant’s TOD instrument only passes title to the beneficiary if the joint tenant who signed the deed is the last surviving joint tenant.

Attorney Practice Note: Illinois recognizes a third co-ownership form—called tenancy by the entirety—that is only available to married couples.35 Tenants by the entirety have a right of survivorship like joint tenants, and the rules for TOD instruments recorded by tenants by the entirety are the same as the rules for joint tenants.36

What happens if the beneficiary named in an Illinois TOD deed dies before the owner?

A beneficiary can take title under an Illinois transfer-on-death instrument only if he or she is living when the owner dies. If the beneficiary predeceases the owner, then the transfer fails (or lapses), and the property becomes part of the owner’s probate estate.37

Because the purpose of TOD instruments is to avoid probate, a lapsed TOD transfer is usually an unwanted result. Illinois’ TOD instrument statute allows property owners to use one or more of the following strategies to avoid lapse:

  • Name multiple beneficiaries. A TOD instrument that names multiple beneficiaries does not lapse unless all beneficiaries predecease the owner. If only one of multiple beneficiaries dies before the owner, the deceased beneficiary’s interest passes to the other beneficiaries in proportion to the surviving beneficiaries’ interests.38
  • Name the owner’s descendant as beneficiary. Illinois has a carve-out that avoids lapse if the deceased beneficiary is the owner’s descendant (i.e., the owner’s child or grandchild). In that case, a predeceased beneficiary’s interest passes instead to the deceased beneficiary’s descendants who are still living.39
  • Include a contingent beneficiary. A TOD instrument can name an alternate beneficiary (also called a contingent beneficiary) who takes title only if the primary beneficiary has already died or is otherwise unable or unwilling to take title. The Illinois Real Property Transfer on Death Instrument Act does not expressly authorize contingent beneficiaries, but the statute gives a property owner sufficient flexibility to tailor the TOD instrument for his or her preferred result.40
  • Name an entity as beneficiary. A person who can be a beneficiary under Illinois law includes (along with individuals) business entities, associations, revocable and irrevocable trusts, and certain fiduciaries.41 Naming an entity as beneficiary reduces the risk of a lapsed transfer because the entity cannot predecease the owner (though the entity must still be in existence to take title). An owner can avoid lapse and still benefit his or her family members by, for example, naming as beneficiary a trust set up for the benefit of the family members.42

Must the owner notify the beneficiaries of the Illinois TOD deed?

There is no legal requirement to notify the beneficiary that a TOD instrument has been signed and recorded.43 However, it is often a good idea to let the beneficiary know about the TOD instrument so that the beneficiary knows to claim the property after the owner dies. The beneficiary records a notice of death affidavit to confirm the title transfer in the public records.44

Can an Illinois TOD deed be used when the property is mortgaged?

An Illinois property owner can use a TOD instrument even if there is a mortgage on the property. Mortgage agreements usually include provisions—called a due-on-sale clauses—that prohibit transfers unless the lender consents to the transfer. Due-on-sale clauses do not prevent an owner from recording a TOD instrument because recording a TOD instrument does not result in a current transfer or give the beneficiary any vested rights in the property.45

Moreover, ownership does not change hands under a TOD instrument until the owner’s death. A federal statute—the Garn-St. Germain Depository Institutions Act of 1982—disallows enforcement of due-on-sale clauses in response to transfers that result from the owner’s death.46

Under Illinois law, a mortgage lender’s rights are not impaired by a TOD instrument.47 The TOD instrument does not affect creditors’ rights during the owner’s life, and, when the owner dies, the beneficiary takes title subject to any liens or mortgages affecting the property.48 The beneficiary may need to reach an agreement with the lender to avoid foreclosure if the deceased owner’s estate is not sufficient to satisfy the mortgage.

Must an Illinois TOD deed be recorded?

Recording is an absolute prerequisite to a valid Illinois TOD instrument. A TOD instrument is not effective unless it is recorded before the owner’s death.49 The deed must be recorded with the county recorder for the county where the property is located. If a TOD instrument is not recorded before the owner’s death, the property will pass to the owner’s probate estate.

Can an Illinois TOD deed be signed by an agent under a power of attorney?

Illinois law expressly prohibits agents acting under power of attorney from creating or revoking transfer-on-death instruments on behalf of their principals.50 An agent cannot sign a TOD instrument even if the power-of-attorney form signed by the property owner specifically authorizes the agent to sign TOD deeds.

What are the requirements for an Illinois TOD deed?

Illinois law prescribes multiple requirements for a valid TOD instrument. A TOD instrument that fails to satisfy any of these requirements may be invalid and could result in expensive estate litigation.

  • General deed requirements. A TOD instrument must meet the Illinois requirements for a valid, recordable deed—including formatting standards and a legal description of the property.51 The exceptions are that a TOD instrument need not state consideration or list the beneficiary’s address.
  • Current owner. A TOD instrument must identify the current owner creating the deed. The owner must be a natural person (actual human being) who is at least 18 years old and owns Illinois real estate. Owners who are entities or acting as fiduciaries cannot create TOD deeds.52
  • Beneficiary. A TOD instrument must identify one or more beneficiaries who will take title at the owner’s death. Any legal person—including individuals, charitable organizations, trusts, or business entities—can be named as beneficiary.53
  • Transfer on death. The language of the TOD instrument must clearly indicate that the transfer will not occur until the current owner dies.54
  • Owner’s signature. The property owner must sign the TOD instrument while he or she has the same capacity needed to create a will.55 The owner must be of legal age and of sound mind and memory when signing.
  • Witness signatures. A TOD instrument must also be signed by at least two credible witnesses.56 A witness should not be a beneficiary of the TOD instrument (or a beneficiary’s spouse).57 The witnesses must attest that the owner voluntarily signed the deed in the witnesses’ presence on the date listed and that the owner was of sound mind and memory at the time of signing.
  • Notarization. A licensed notary public must acknowledge the signatures of the owner and of the two witnesses.58
  • Recording. The TOD instrument must be recorded before the owner’s death.59 It must be filed for recording with the county recorder where the property is located. Recording before the owner’s death is mandatory; an unrecorded TOD instrument is void and ineffective.60

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  1. 755 ILCS 27/20.
  2. 755 ILCS 27/30.
  3. See 755 ILCS 27/75 (notice of death affidavit to confirm transfer to beneficiary).
  4. 755 ILCS 27/20.
  5. See 755 ILCS 27/10.
  6. 755 ILCS 27/70.
  7. 755 ILCS 27/60(a)(1).
  8. 755 ILCS 27/60(a)(2)-(3).
  9. 755 ILCS 27/60(a)(6).
  10. 755 ILCS 27/60(a)(5).
  11. 755 ILCS 27/60(a)(4).
  12. 755 ILCS 27/60(a)(1).
  13. 755 ILCS 27/60(b).
  14. 755 ILCS 27/25
  15. 755 ILCS 27/55(a)(1)(A).
  16. 755 ILCS 27/55(a)(1)(B).
  17. 755 ILCS 27/55(a)(2).
  18. 755 ILCS 27/55(b).
  19. 755 ILCS 27/65(a)(1).
  20. 755 ILCS 27/30.
  21. 755 ILCS 27/75.
  22. 755 ILCS 27/65(c).
  23. 755 ILCS 27/65(b).
  24. 755 ILCS 27/85.
  25. 755 ILCS 27/66.
  26. 755 ILCS 5/2-8.
  27. 750 ILCS 10/4.
  28. 755 ILCS 27/20.
  29. 755 ILCS 27/65(a)(2).
  30. 765 ILCS 1005/1.
  31. 765 ILCS 1005/1.
  32. 755 ILCS 27/70(a).
  33. 755 ILCS 27/70(b).
  34. 755 ILCS 27/70(c).
  35. 765 ILCS 1005/1c.
  36. 755 ILCS 27/5.
  37. 755 ILCS 27/65(3).
  38. 755 ILCS 27/65(a)(4).
  39. 755 ILCS 27/65(a)(5).
  40. See 755 ILCS 27/65(a) (“Except as otherwise provided in the transfer on death instrument …”).
  41. 755 ILCS 27/5.
  42. 755 ILCS 27/21.
  43. 755 ILCS 27/50.
  44. 755 ILCS 27/75.
  45. 755 ILCS 27/60.
  46. 12 USC § 1701j-3(d)(5).
  47. 755 ILCS 27/60(a)(3).
  48. 755 ILCS 27/65.
  49. 755 ILCS 27/40(a)(3).
  50. 755 ILCS 27/35.
  51. 755 ILCS 27/40(a)(1).
  52. 755 ILCS 27/5.
  53. Id.; see also 755 ILCS 27/21 (allowing trust as beneficiary).
  54. 755 ILCS 27/40(a)(2).
  55. 755 ILCS 27/35.
  56. 755 ILCS 27/45(a).
  57. 755 ILCS 27/45(c).
  58. 755 ILCS 27/45(a).
  59. 755 ILCS 27/40(a)(3).
  60. 755 ILCS 27/40(b).